Financial Services Commission v Stocks and Securities Ltd

• Jurisdiction: Jamaica
• Judge: Stephane Jackson-Haisley J.
• Judgment Date: 20 April 2023
• Docket Number: CLAIM NO. SU 2023CD00036
• Court: Supreme Court (Jamaica)

IN THE MATTER of the Financial Services Commission Act

and

IN THE MATTER of the Companies Act

Between

Financial Services Commission

Claimant

and

Stocks and Securities Limited

1 ^st Defendant

and

Caydion Campbell

2 ^nd Defendant

and

HUGH CROSKERY

3 ^rd Defendant

[2023] JMCC COMM. 19

Stephane Jackson-Haisley J.

CLAIM NO. SU 2023CD00036

IN THE SUPREME COURT OF JUDICATURE OF JAMAICA

IN THE COMMERCIAL DIVISON

APPLICATION FOR INTERIM INJUNCTION PURSUANT TO SECTION 49(h) JUDICATURE (SUPREME COURT) ACT — RULE 17.1(a), 17.1(4) and 17.2 OF THE CIVIL PROCEDURE RULES, 2002 — FINANCIAL SERVICES COMMISSION ACT — THE COMPANIES ACT — WHETHER DEFENDANTS AT LIBERTY TO WIND UP COMPANY AND DISSIPATE FUNDS — WHETHER TEMPORARY MANAGER REDUNDANT — WHETHER CLAIMANT VESTED WITH FULL AND EXCLUSIVE MANAGEMENT OVER 1 ^ST DEFENDANT — WHETHER CAUSE OF ACTION MUST BE ESTABLISHED — WHETHER THERE IS A SERIOUS ISSUE TO BE TRIED — WHETHER THERE HAS BEEN MATERIAL NON-DISCLOSURE — WHETHER UNDERTAKING AS TO DAMAGES REQUIRED BY THE CROWN — BALANCE OF CONVENIENCE

Ms. Lisa White, Ms. Faith Hall and Ms. Nicola Richards instructed by Director of State Proceedings for the Claimant

Mrs Caroline P. Hay KC, Mrs. Kimberley McDowell, Mrs Tereece K. Campbell Wong and Mr. Zurie Johnson instructed by Caroline P. Hay, Attorneys-at-law for the 1 ^st and 2 ^nd Defendants

Mr. Peter Champagnie KC and Mr. Neco Pagan for the 3 ^rd Defendant

IN CHAMBERS VIA VIDEO CONFERENCE

Stephane Jackson-Haisley J.

INTRODUCTION

1 The Claimant, the Financial Services Commission (hereafter “FSC”) a body corporate and the regulatory body of the Government of Jamaica was created for the purpose of inter alia supervising and regulating financial institutions. In response to the reports of fraud involving Billions of Jamaican Dollars at Stocks and Securities Limited (hereafter “SSL”) the FSC issued Directions to SSL on January 1 2, 2023 restraining the company from conducting transactions on its behalf or on behalf of clients without the FSC's approval. On January 17, 2023, the FSC exercised powers under Section 8(5) of the Financial Services Commission Act (hereafter “the FSC Act”) and assumed temporary management of SSL on that same date.

2 According to the Claimant, the 1 ^st, 3 ^rd and the then 4 ^th and 5 ^th Defendants instead of working with it in its capacity as Temporary Manager, they appointed the 2 ^nd Defendant as Trustee and made attempts to wind up the company thereby frustrating the FSC's temporary management. By taking this action, the 1 ^st, 3 ^rd and the then 4 ^th and 5 ^th Defendants purported to vest all assets of the company in the 2 ^nd Defendant which has caused the FSC to harbour the fear of the dissipation of the funds of investors when investigation concerning the fraud is extant.

3 This led the FSC to take action in the form of filing an Ex-parte Notice of Application for Interim Injunction on January 25, 2023 seeking the following injunctive reliefs:

• (a) The Defendants be restrained whether by themselves, their servants and/or agents including but not limited to Jeffrey Cobham, Mark Croskery, Caydion Campbell and Sarah Meany or howsoever otherwise from disposing of and/or dealing with its assets and liabilities, or with assets and liabilities in its name, or its clients' name, wheresoever situate, or from withdrawing or transferring or otherwise dissipating any funds from its accounts or its clients' account or from accounts in its name wheresoever held for the entire portfolio of the company.

• (b) The Defendants be retrained whether by themselves, their servants and/or agent including but not limited to Jeffrey Cobham, Mark Croskery, Caydion Campbell and Sarah Meany or howsoever otherwise from interfering with the acts of the servants and/or agents of the FSC — Temporary Manager of SSL in accordance with the FSC Act.

• (c) The Defendants be restrained whether by themselves, their servants and/or agent including but not limited to Jeffrey Cobham, Mark Croskery, Caydion Campbell and Sarah Meany or howsoever otherwise from winding up or dissolving the company and liquidating the 1 ^st Defendant's assets and liabilities.

• (d) The Defendants be restrained whether by themselves, their servants and/or agents including but not limited to Jeffrey Cobham, Mark Croskery, Caydion Campbell and Sarah Meany or howsoever otherwise from removing its name from the records and/or engaging with the Companies Office of Jamaica in any manner without the intervention and/or consent of the Claimant.

• (e) The Defendants be restrained whether by themselves, their servants and/or agents including but not limited to Jeffrey Cobham, Mark Croskery, Caydion Campbell and Sarah Meany or howsoever otherwise from reorganizing the company or its operations whether it be in any document form or organization of its members, or the assets and liabilities.

• (f) The Defendants be compelled whether by themselves, their servants and/or agents including but not limited to Jeffrey Cobham, Mark Croskery, Caydion Campbell and Sarah Meany or howsoever otherwise to hand over the control of the company to the Claimant.

• (g) The Defendants be compelled whether by themselves, their servants and/or agents including but not limited to Jeffrey Cobham, Mark Croskery, Caydion Campbell and Sarah Meany or howsoever otherwise to grant full and unrestrained access to the Claimant to (including but not limited to) all documentation, information books, records, assets and liabilities, computers, software and hardware and reserves in the possession and/or control of the 1 ^st Defendant so the Claimant can carry out its functions under the FSC Act.

• (h) The Defendants, be compelled whether by themselves, their servants and/or agents including but not limited to Jeffrey Cobham, Mark Croskery, Caydion Campbell and Sarah Meany or howsoever otherwise to comply or otherwise cooperate with the directions of the Claimant and the Temporary Manager and any servant and/or agent of the Temporary Manager.

• (i) The Defendants be compelled whether by themselves, their servants and/or agents including but not limited to Jeffrey Cobham, Mark Croskery, Caydion Campbell and Sarah Meany or howsoever otherwise to comply with any cease and desist order of the Claimant issued pursuant to the FSC Act.

  3. On the said day they appeared before me and secured an interim injunction. What is now before the Court is in the inter-partes hearing of the Notice of Application for Court Orders wherein the Claimant seeks an extension of the interim injunction.

4 The Ex-parte injunction was granted on January 25, 2023 in terms of the orders sought. What is now before me is the Inter-partes hearing for the extension of the interim injunction.

THE CLAIMANT'S CASE

5 The application is supported by Affidavit of Urgency of Donia Fuller-Barrett (hereafter “Mrs. Fuller-Barrett”) in support of Injunctive Relief also filed on January 25, 2023 and her Second Affidavit filed on February 24, 2003. In addition, there is also her Affidavit in support of the Amended Fixed Date Claim Form filed on February 27, 2013. Mrs. Fuller-Barrett deponed in her Affidavit evidence that on or about Tuesday, January 10, 2023 the FSC received a letter from SSL providing notice of an incident of fraud at the company. The letter did not specify the extent and nature of the fraudulent activities however the letter prompted the FSC to put mechanisms in place to carry out further investigations. On January 11, 2023, the FSC received independent and credible reports of the alleged fraudulent activities and the FSC took steps to contact Jamaican Law enforcement agents and to manage and control the 1 ^st Defendant.

6 On the 12 ^th January, 2023 the FSC dispatched an examination team to the 1 ^st Defendant and was advised by the 1 ^st Defendant's Senior Director Mr. David Wong-Ken that the company would be going into receivership. Immediately the FSC wrote to the SSL issuing directions to restrain the company from conducting transactions on its own behalf or on behalf of its clients without the FSC's approval. Mrs. Fuller-Barrett further deponed that by email dated January 15, 2023, the Chief Financial Officer of the 1 ^st Defendant, Mrs. Allison Hemmings requested an introductory meeting to be had with (i) the FSC, (ii) Caydion Campbell (hereafter “Mr. Campbell”) who was stated to be the receiver and (iii) members of the 1 ^st Defendant's staff. Despite discussions regarding receivership, the 1 ^st Defendant filed or caused to be filed at the Companies Office of Jamaica a Special Resolution dated January 16, 2023 along with a Notice of Appointment stating that the affairs of the company will be placed into a Members' Voluntary Winding-up and that Mr. Campbell was purportedly appointed as Trustee.

7 Upon learning of the steps taken by the 1 ^st Defendant, the FSC, pursuant to its powers under Section 8(5) and Parts A and C of the Third Schedule of the Act exercised its powers to assume temporary management of the 1 ^st Defendant on January 17, 2023. The FSC further (i) served SSL with Notice under Part C of the Third Schedule of the Act, (ii) posted the Notice at SSL's offices, (iii) furnished the Registrar of the Supreme Court with the said Notice and (iv) published the Notice in the Sunday Gleaner on January 22, 2023 and in the Daily Gleaner on January 23, 2023.

8 Mrs. Fuller-Barrett indicated that by letter dated January 18, 2023, the FSC received a letter from Frater, Ennis & Gordon, Attorneys-at-law for the Honourable Usain Bolt, OJ, CD in relation to the sums. he deposited with SSL. Based on the alleged fraud it is anticipated that there will be similar claims. by other investors.

9 She expressed that by letter dated January 19, 2023, the FSC wrote to SSL to register its concern regarding the purported appointment of a Trustee and by letter dated January 20, 2023, the FSC received a letter from SSL's purported...